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CNN Live Today
President Bush Speaks at Renewable Fuels Association; Egypt Terror Attack
Aired April 25, 2006 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DARYN KAGAN, CNN ANCHOR: We're talking about how high will it go? Motorists across the country are asking that question. Some may be afraid to learn the answer. Check out some of these numbers. AAA saying the average for a gallon of regular gas today is about $2.92 a gallon. Compare that with $2.50 a gallon one month ago and $2.22 a year ago.
Americans are looking to President Bush for help and this hour the president announces a plan. The four points he plans to make, as we're hearing, make sure consumers are treated fairly -- that includes a federal probe of possible price gouging --promote greater fuel efficiency, boost the gasoline supply at home and promote alternative fuels.
Our White House correspondent Ed Henry there at the White House to talk more about the plan and the prices.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Good morning.
KAGAN: Ed, a bunch of EHQs, Ed Henry questions, to start our hour here. First of all, what are we learning about President Bush is going to make some kind of announcement about the strategic reserve.
HENRY: We have a little breaking news. A senior administration official confirming to CNN that in fact the president has decided to temporarily halt all deposits to the strategic petroleum reserve. Basically wants to stop those deposits until the end of the summer. That will ease the burden on consumers a little bit, increase supply.
That's one part of the four-point plan. It's important to note, the president is not announcing that we will be tapping into the strategic petroleum reserve. Instead, just halting all deposits until after the summer.
How big of a deal is this? Well, according to the Department of Energy, the current storage capacity in this petroleum reserve is about 727 million barrels. We can draw down about 4.4 million barrels a day. The point, obviously, being that as we increase that supply, that could lower gas prices at least temporarily. That's going to be something that's obviously going to be welcomed by consumers.
Daryn.
KAGAN: But, meanwhile, how much power does even to the office of the president, not even this particular president, have to do with keeping gas prices down? HENRY: That's one of the best levers he has, frankly. Other than that, ordering up these federal investigations, which would be another part of the four-point plan. He's going to have the Federal Trade Commission, as well as the Departments of Justice and Energy investigate whether or not there's been price gouging.
I mean, quite frankly, that's not that great of a power. Because if you'll remember back to last year, last summer we saw gas prices very high, then we had the hurricanes, Katrina, Rita and others. We saw prices spike again and the president ordered up an investigation, had the federal government looking at whether there was price gouging. We saw prices come down a bit. It dipped. But now they're back with a vengeance. And so it's a very limited power, but I think, obviously, the president wants to put a heat on these companies, put some heat on them and make sure that they are not price gouging to add to the woes that consumers are already feeling.
Daryn.
KAGAN: All right, Ed, you're staying with us?
HENRY: That's right.
KAGAN: To listen in. All right, Ed Henry at the White House. Ed, thank you.
We will hear from the president. We expect him to speak in about three minutes. But we also want to hear from you at home. What are you doing, really? I mean we know you're ticked about the prices, but what are you doing to conserve gas? E-mail us at livetoday@cnn.com. We'll share some of your e-mail a little bit later in the program.
As we talk about rising gas prices and falling poll numbers, President Bush hits a new low in a new survey. Our senior political analyst Bill Schneider is part of the best political team on television. His report from "ANDERSON COOPER 360."
(BEGIN VIDEOTAPE)
WILLIAM SCHNEIDER, CNN SR. POLITICAL CORRESPONDENT (voice-over): How low can you go? The latest CNN poll done over the weekend by the Opinion Research Corporation shows President Bush with a 32 percent job rating, the lowest yet for this president. In four polls taken over the last 10 days, Bush's numbers have dropped into the low 30s. Sounds like a simple story: gas prices up, Bush numbers down.
UNIDENTIFIED FEMALE: I think I'm going to go bankrupt having to fill my gas tank to get to work.
SCHNEIDER: More than two-thirds of Americans say recent gas price increases have caused them financial hardship. Bush's approval numbers dropped below 30 percent among people who say gas prices are causing them severe hardship. What the public sees is greed, particularly when they hear about record oil company profits and breathtaking oil executive payouts. What do people expect the president to do about high gas prices? Democrats have an answer. GOV. JENNIFER GRANHOLM, (D) MICHIGAN: And we are asking citizens to join together with us and hopefully with citizens across the country to sign a petition to demand that the president of the United States cap excessive oil profits.
SCHNEIDER: President Bush's answer sounds, well, to some ears, a little too much like a Texas oil man's.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I know gas prices are high. You know, there's no magic wand to wave. We'll make sure that the energy companies are pricing their product fairly.
SCHNEIDER: Gas prices are a part of the story, but not all of it. After all, President Bush's numbers have been dropping all year. And most of those who say they're not suffering any hardship still disapprove of President Bush. Why? Lots of I's. Iraq, illegal immigration, indictments. Most Americans no longer consider President Bush honest and trustworthy or strong and decisive. The public is not even sure the president is competent at his job.
Bill Schneider, CNN, Washington.
(END VIDEOTAPE)
KAGAN: And you can get a fresh look at the top stories from Anderson Cooper. Join "AC 360" weeknights at 10:00 p.m. Eastern.
Well, we all complain about the high gas prices, but are we, as American consumers, really willing to put our money where our mouths are? Well, apparently not. Those big gas-guzzlers are still big sellers. A JD Power survey shows very little change in car buying patterns from last summer. In the last three months, nearly a quarter of all cars and trucks sold had 8 cylinder engines, 41 percent had six cylinders. Only about a third had fuel saving four-cylinder engines.
Big businesses, mom and pop, schools, they are all feeling the pinch from spiraling gas prices. But like you and me, there's little they can do. Here now is reporter Cathy Gandolfo with our affiliate WPVI.
(BEGIN VIDEOTAPE)
CATHY GANDOLFO, CNN CORRESPONDENT (voice-over): Washington Township is one of the largest school districts in South Jersey with most of its 10,000 students using school buses. There are 67 full- sized diesel engine buses and nine vans. As part of the consortium, the district pays a discount $2.27 a gallon for fuel, but that's up from $1.61 last year this time. Transportation Manager Genia Sullivan has been crunching numbers. But any way she looks at it, the result is bad.
GENIA SULLIVAN, WASHINGTON TOWNSHIP SCHOOL DISTRICT: For the 2005/2006 school year, I budgeted $152,000.
GANDOLFO: And the reality?
SULLIVAN: We're going to be spending close to $347,000, if not more, if the price continues to rise.
GANDOLFO: The cost doesn't include contracts with outside bus companies that provide an additional 47 buses. Exley's Nursery in Sewell has a fleet of 28 trucks of various sizes, but none gets better than 10 miles to the gallon. Bob Exley estimates using about 1500 gallons of gasoline and diesel fuel a week, at a cost that has risen to $4,200.
BOB EXLEY, NURSERY OWNER: Depending on how the prices increase, we're paying at least 30 percent more, if not greater than that. And then if you compare it to last spring of '05, then you're up almost 100 percent.
GANDOLFO: Then there's the cost of fuel-driven equipment, from blowers to mowers, from weed wackers to stone cutters.
EXLEY: Every one of these things are power driven by fuel of some sort.
(END VIDEOTAPE)
KAGAN: Well, the state of California is striking back. A legislative panel just approved a bill that would slap a tax on excessive oil profits. The money would go to seniors to help pay for prescription drugs.
Oil companies, not too surprisingly, are not happy about that. They say the move could drive up prices even more. The bill still has to clear the full assembly.
And then we're looking at live pictures, Washington D.C.. This is where President Bush will be speaking before the Renewable Fuels Association. We expect him any minute now. Expecting to make a number of comments about the energy situation and gas prices here in the U.S. We'll go to that live when it begins.
A day after a bloodbath at an Egyptian resort, cleanup and arrests. Bombs ripping through two cafeterias and a supermarket killing nearly two dozen people and shattering many more lives.
CNN's Paula Hancocks is at the site.
(BEGIN VIDEOTAPE)
PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): Broken glass litters the streets that were jammed with tourists. Bloody footprints lead away from the scene of the blasts, an eerie reminder of the carnage of the night before. Tourists of all nationalists should be waking up to another day of their holiday. Instead, locals in the Red Sea town of Dahab are coming to turns with being the third Sinai resort to be attacked in 18 months. At least 23 dead, more than 60 others wounded.
Now the timing of these blasts was crucial, 7:15 in the evening. These streets would have been crammed with tourists, Egyptian and foreigners. Many of them going into the touristy shops here. The likes of this jewelry one which looks like it hasn't been touched since just seconds after the blast.
Serbi Apel Atef (ph) has been manager of the Alaska Camp Backpacker's Hostel for three years. He was standing just feet away from one of the blasts. He is lucky to be alive, but believes the town is ruined.
SERBI APEL ATEF (ph), ALASKA CAMP BACKPACKER'S HOSTEL: I don't think just nobody would come. Even if they come, they will be scared. I had so many Egyptian guests last night order (INAUDIBLE).
HANCOCKS: Dahab has always been a diver's paradise. Jason Levitt (ph) has been an instructor here for three years. He was here a year and a half ago when a bomb 65 miles north in Taba killed 34, and in July when a bomb 75 miles south in Sharm el Sheikh killed 67.
JASON LEVITT (ph): It's not really any surprise to any of us. I mean, if you've been here long enough, you know everything else has been bombed. It's a natural progression that this was going to be the next place.
HANCOCKS: A tourist's paradise once again ripped apart by bombs.
Paula Hancocks, CNN, Dahab, Egypt.
(END VIDEOTAPE)
KAGAN: And now live to Washington, D.C. President Bush talking about energy and gas prices.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: For 25 years the Renewable Fuels Association has been a tireless advocate for ethanol producers. Your advocacy is paying off. Renewable energy is one of the great stories of recent years, and it's going to be a bigger story in the years to come.
(APPLAUSE)
I like the idea of talking to people who are growing America's energy security. I like the idea of policy that combines agriculture and modern science with the energy needs of the American people.
I'm here to talk to you about the contributions you are making and I'm here to talk to you about the need for this country to get off our dependency of oil.
So I want to thank Bob for the invitation. I want to thank Ron Miller, the chairman of the Renewable Fuels Association. I want to thank the board of directors and the members of the Renewable Fuels Association.
I thank the members of my administration who are here. Clay Sell is the deputy secretary of energy, has joined us.
I see members of the United States Congress who are here. I appreciate Jack Kingston of Georgia, Jerry Weller of Illinois and Gil Gutknecht of Minnesota for joining us. Thank you all for your interest in this very important subject.
(APPLAUSE)
Before I talk about energy I do want to share with you some thoughts about the war on terror.
I just got off of a videoconference with our strong ally Tony Blair. And we were talking about a major development that has taken place in the war on terror. After months of patient negotiations, Iraqi leaders reached an agreement on a unity government. And that's positive. This is a government...
(APPLAUSE)
This new leadership reflects the diversity of Iraq. And it reflects the will of the Iraqi people who defied the terrorists and killers and went to the polls last December.
This new government is an important milestone for a free Iraq. And it's the beginning of a new chapter in our relationship with the Iraqi people.
When I was in California over the weekend, I had the opportunity to speak to the three leaders: the president, the speaker and the prime minister designee.
I congratulated them on their courage and encouraged them to stand strong for the Iraqi people. I reminded them that people had voted, that people had expressed their desire for democracy and unity, and now there's the chance for these leaders to stand up and lead.
I told them that they have important responsibilities to their people: to rebuild infrastructure and to improve their economy and enhance security.
I was pleased with the response I got. It's important for the American people to know that these three leaders appreciate the sacrifice that our troops have made and our taxpayers have made to help them realize a dream. And the dream is to live in a unified, free society.
A free Iraq is in the interests of the United States of America. A free Iraq will be a part of laying the peace for generations to come. And a free Iraq will be a major defeat for the terrorists who still want to do us harm.
(APPLAUSE)
We've got good news here at home on the economic front, too. This economy of ours is growing and the entrepreneurial spirit in America is strong.
We've cut the taxes for everybody who paid income taxes and that tax relief is getting results. Last year our economy grew faster than any major industrialized nation. Since August of 2003, this economy of ours has created 5.1 million new jobs. The unemployment rate nationwide is 4.7 percent; that's lower than the average rate of the '60s, '70s, '80s and '90s. The American people are working.
(APPLAUSE)
Farm income's up, agricultural exports are growing. Real after- tax income is up over 8 percent per American since 2001. Productivity is high. More people own a home than ever before in our nation's history.
This economy is strong and we intend to keep it that way. And one way to keep it that way is to make the tax cuts permanent.
(APPLAUSE)
Yet amongst these hopeful signs, there's an area of serious concern. And that is high energy prices. And the prices that people are paying at the gas pumps reflect our addiction to oil.
Our addiction to oil is a matter of national security concerns. After all, today we get about 60 percent of our oil from foreign countries. That's up from 20 years ago, where about 25 percent of our oil came from foreign countries.
Now, part of the problem is that some of the nations we rely on for oil have unstable governments or agendas that are hostile to the United States. These countries know we need their oil and that reduces our influence, our ability to keep the peace in some areas.
And so energy supply is a matter of national security. It's also a matter of economic security.
What people are seeing at their gasoline pumps reflects the global economy in which we live. See, when demand for oil goes up in China or India, two fast-growing economies, it affects the price of oil worldwide. And when the price of crude oil goes up, because it's such an important part of the price of gasoline, the average citizen sees the price of gasoline go up at the pump.
Gasoline price increases are like a hidden tax on the working people. They're like a tax on our farmers. They're like a tax on small businesses. Energy experts predict gas prices are going to remain high throughout the summer. And that's going to be a continued strain on the American people.
So the fundamental question is, what are we going to do? What can the government do?
One of the past responses by government, particularly from the party of which I'm not a member...
(LAUGHTER)
... has been to propose price fixing, or to increase the taxes. Those plans haven't worked in the past.
I think we need to follow suit on what we have been emphasizing, particularly through the energy bill, and that is to encourage conservation, to expand domestic production and to develop alternative sources of energy, like ethanol.
(APPLAUSE)
Signing the energy bill was one thing -- and I want to thank the members of Congress for getting a comprehensive energy bill to my desk -- but there's a lot more to be done.
First thing is to make sure that the American consumers are treated fairly at the gas pump.
Americans understand by and large that the price of crude oil is going up and that the prices are going up, but what they don't want and will not accept is manipulation of the market. And neither will I.
The Federal Trade Commission is investigating whether the price of gasoline has been unfairly manipulated in any way.
I'm also directing the Department of Justice to work with the FTC and the Energy Department to conduct inquiries into illegal manipulation or cheating related to the current gasoline prices.
The FTC and the attorney general are contacting 50 state attorneys general to offer technical assistance to urge them to investigate possible illegal price manipulation within their jurisdictions.
In other words, this administration is not going to tolerate manipulation. We expect our consumers to be treated fairly.
To reduce gas prices, our energy companies have got a role to play. Listen, at record prices, these energy companies have got large cash flows and they need to reinvest those cash flows into expanding refining capacity or researching alternative energy sources or developing new technologies or expanding production in environmentally friendly ways.
That's what the American people expect. We expect there to be strong reinvestment to help us with our economic security needs and our national security needs.
Record oil prices and large cash flows also mean that Congress has got to understand that these energy companies don't need unnecessary tax breaks like the write-offs of certain geological and geophysical expenditures or the use of taxpayers' monies to subsidize energy companies' research into deepwater drilling.
I'm looking forward to Congress to take about $2 billion of these tax breaks out of the budget over a 10-year period of time.
Cash flows are up. Taxpayers don't need to be paying for certain of these expenses on behalf of the energy companies.
(APPLAUSE)
The second part of a good plan to confront high gasoline prices is to promote greater fuel efficiency. And the easiest way to promote fuel efficiency is to encourage drivers to purchase highly efficient hybrid or clean diesel vehicles, which, by the way, can run on alternative energy sources.
Hybrid vehicles run on a combination of a traditional engine and electric battery. The twin sources of power allow hybrid cars and trucks to travel about twice as far on a gallon of fuel as gasoline- only vehicles. When people are driving hybrids, they're conserving energy.
Clean diesel vehicles take advantage of the advantage in diesel technology to run on 30 percent less fuel than gasoline vehicles do.
And more than 200,000 hybrid and clean diesel vehicles were sold in the United States last year. It's the highest sales in history.
Congress wisely, in the energy bill, expanded the tax credit for purchases of hybrid and clean diesel vehicles up to as much as up to $3,400 per purchase. That made sense. If we're trying to conserve energy, if we want to become less dependent on oil, let's provide incentives for consumers to use less energy.
The problem is that these tax credits apply to only a limited number of hybrid and clean diesel vehicles for each manufacturer. If the automakers sell more than their limit, new purchasers are not eligible for the full tax credit.
And so here's an idea that can get more of these vehicles on the road, and that is to have Congress make all hybrid and clean diesel vehicles sold this year eligible for federal tax credits.
We want to encourage people to make wise choices when it comes to the automobiles they drive.
The third part of the plan to confront high gas prices is to boost our supplies of crude oil and gasoline.
It makes sense. We're in a supply-and-demand world. If prices are high, it means demand is greater than supply.
One way to ease price is to increase supply.
One immediate way we can signal to people we're serious about increasing supply is to stop making purchases or deposits to the Strategic Petroleum Reserve for a short period of time. I directed the Department of Energy to defer filling the reserve this summer.
Our strategic reserve is sufficiently large enough to guard against any major supply disruption over the next few months. So by deferring deposits until the fall, we'll leave a little more oil on the market. Every little bit helps. We also need to ensure that there are not needless restrictions on our ability to get gasoline to the pump.
Under federal air quality laws, some areas of the country are required to use a fuel blend called reformulated gasoline. Now, as you well know, this year we're undergoing a rapid transition in the primary ingredient in reformulated gas from MTBE to ethanol. And I appreciate the role the ethanol producers are playing to meet this challenge.
You're playing a vital role.
Yet state and local officials in some parts of our country worry about supply disruption for the short term. They worry about the sudden change from MTBE to ethanol -- that the ethanol producers won't be able to meet the demand. And that's causing the price of gasoline to go up some amount in their jurisdictions.
And some have contacted us to determine whether or not they can ask the EPA to waive local fuel requirements on a temporary basis. And I think it makes sense that they should be allowed to, so I'm directing EPA Administrator Johnson to use all of his available authority to grant waivers that would relief critical fuel supply shortages. And I do that for the sake of our consumers.
If Johnson finds that he needs more authority to relieve the problem, we're going to work with Congress to obtain the authority he needs.
Secondly, we also need to confront the larger problem of too many localized fuel blends, which are called boutique fuels.
The number of boutique fuels has expanded rapidly over the years, and America now has an uncoordinated and overly complex set of fuel rules. And when you have an uncoordinated, overly complex set of fuel rules, it tends to cause the price to go up.
And so I'm directing Administrator Johnson to bring the governors together to form a task force on boutique fuels. And the mission of this task force will be to find ways to reduce the number of boutique fuels and to increase cooperation between states on gasoline supply decisions. I want to simplify the process for the sake of our consumers.
And then I'm asking them to get these recommendations to my desk. And I look forward to working with the United States Congress to simplify the process.
Listen, we need to expand our refining capacity. One of the problems we face is that we've got tight supplies because we haven't expanded refining capacity. There hasn't been a new refinery built in 30 years.
If you're worried about the price of gasoline at the pump, it makes sense to try to get more supply to the market. That will be beneficial for American consumers to get more supply to the market. Further reason why we haven't expanded or built new refineries to the extent we need to is because the permitting process in this country is extremely complicated. Companies that want to upgrade their equipment or expand their existing refineries or build new ones often have to wade through long bureaucratic delays and/or lawsuits.
To make this gasoline supply more affordable and more secure, Congress needs to allow refiners to make modifications on their refineries without having to wait for years to get their idea approved.
I mean, if we want more supply, let's reduce the paperwork and the regulations. Congress also needs to simplify and speed up the permitting process for refinery construction and expansion. And so I'm going to work with Congress. It's important for Congress to cut through the red tape and guarantee refinery construction permits will be processed within a single year.
We also need to be mindful of the fact that we can find additional crude oil in our own country in environmentally friendly ways. The technology is such that we're capable of environmentally sensitive exploration.
We've got tight crude oil supplies and it seems like it makes sense for us to use our new technologies to find more crude, particularly crude here at home.
One of the issues, you know, that has been confronting Congress is ANWR. And I fully recognize that the passage of ANWR will not increase the oil supply immediately. But it's also important to understand that if ANWR had been law a decade ago, America would be producing about a million additional barrels of oil a day and that would increase our current level of domestic supply by 20 percent.
We've got to be wise about energy policy here in America. We've got to make sure that we protect the environment, but we also got to make sure that we find additional supplies of crude oil in order to take the pressure off the price of crude, which takes the pressure off the price of gasoline at the pump.
All I've outlined here today are interim strategies. Short-term and interim strategy. The truth of the matter is the long-term strategy is to power our automobiles with something other than oil.
(APPLAUSE)
Something other than gasoline which is derived from oil.
And we're making progress. In the State of the Union address, I talked about the Advanced Energy Initiative. And this is an aggressive plan. A wise way of using taxpayer's money to get us off our addiction to oil.
We have a unique opportunity to continue forward with this plan. Technology is the way, really, to help us to help change America for the better. Years of investment in fuels like ethanol have put us on the threshold to major breakthroughs. And those breakthroughs are being a reality for our consumers.
I set a goal to replace oil from around the world. The best way and the fastest way to do so is to expand the use of ethanol.
Advanced Energy Initiative is focused on three promising ways to reduce gasoline consumption. One is increasing the use of ethanol. Another is improving hybrid vehicles. And finally, one is developing hydrogen technology.
All three go hand in hand. All three are an important part of the strategy to help us diversify away from hydrocarbons.
Ethanol has got the largest potential for immediate growth. Most people may not know this, but today most of ethanol produced in America today is from corn. Most vehicles can use 10 percent ethanol in their automobiles.
What's interesting that Americans don't realize, with a little bit of expenditure, we can convert a standard automobile to what's called a flex-fuel automobile. And that flex-fuel vehicle can use fuel that is 85 percent ethanol.
Amazing, isn't it? Without much cost, your automobile can be converted to be able to burn fuel with 85 percent ethanol or a product made from corn grown right here in America.
Ethanol is a versatile fuel. And the benefits are easy to recognize when you think about it.
One, the use of ethanol in automobiles is good for the agricultural sector. I'm one of these people who believes when the agricultural sector is strong, America is strong.
(APPLAUSE)
The way I like to put it would be -- it's a good thing when a president can sit there and say, "Gosh, we've got a lot of corn. And that means we're less dependent on foreign sources of oil."
(APPLAUSE)
Years back, they'd say, "Oh, gosh, we've got a lot of corn and worried about the price."
(LAUGHTER)
Ethanol is good for our rural communities. It's good economic development for rural America. You know, new bio-refinery construction creates jobs and local tax revenues. When the family farmer's doing well, it's good for the local merchants.
Ethanol is good for the environment. I keep emphasizing that we can be good stewards of our environment and at the same time continue with our economic expansion. And ethanol will help meet that strategy.
You don't have to choose between good environment and good economics. You can have both by the use of technology. And ethanol is an example of what I'm talking about.
And ethanol's good for drivers.
Ethanol is home-grown. Ethanol will replace gasoline consumption.
Ethanol's good for the whole country. And we've been...
(APPLAUSE)
I thought you'd like that.
(LAUGHTER)
The ethanol industry is booming. It must be exciting to have worked for as long as you have on encouraging alternative sources of energy and then all of a sudden see the work come to fruition.
Last year, America used a record 4 billion gallons of ethanol. There are now 97 ethanol refineries in our country, and nine of those are expanding and 35 more are under construction. The ethanol industry is on the move, and America is better off for it.
Many of these refineries are in the Midwest -- the Midwest because that is where the source -- you know, the feed stock for ethanol comes from. That happens to be corn.
But what's really interesting, there are new plants springing up in unexpected areas, like the Central Valley of California, or Arizona, or, of course, in the sugar fields of Hawaii. After all, sugar can be used for ethanol. As a matter of fact, it's a very efficient feedstock for ethanol.
Ethanol required our support. In other words, to get this new industry going it required a little nudge from the federal government.
Since I took office we've extended the tax credit of 51 cents gallon for suppliers. We've created a new 10-cent-per-gallon tax credit to provide extra help to small ethanol producers and farmers. We've provided $85 million of loans and grants for the ethanol business ventures.
In other words, this is a collaborative effort. The federal government has got a role to play to encourage new industries that'll help this nation diversify away from oil.
And so, we're strongly committed to corn-based ethanol produced in America. Yet you've got to recognize there are limits to how much corn can be used for ethanol. I mean, after all, we got to eat some.
(LAUGHTER)
And animals have got to eat.
And so, I am committed to furthering technological research to find other ways, other sources for ethanol.
We're working on research -- strong research to figure out cellulosic ethanol that can be made from wood chips or stalks or switchgrass. These materials are sometimes waste products that are just simply thrown away. And doesn't it make sense for us -- I think it does -- to use taxpayers' money to determine whether or not we can use these raw materials to make something out of nothing so that we continue the advance of ethanol and so the market for ethanol expands throughout the United States?
I proposed, and I'm working with these members of the Renewable Caucus, $150 million in next year's budget for research in advanced forms of ethanol. And that's a significant increase over previous levels. I think it makes sense. And surely the prices at the gas pumps should say to the taxpayer, "It makes sense for this government to spend money on development to find alternative sources of energy."
(APPLAUSE)
I also support biodiesel fuel, which can...
(APPLAUSE)
... which can substitute for regular diesel in cars, trucks, buses and farm equipment.
Last year I went out to see a biodiesel refinery in Virginia that's making clean-burning fuel from soybean oil. And it was a really interesting process to watch. I don't know if you know this or not, but they are able to use waste products like recycled cooking grease to manufacture biodiesel.
In other words, research and development has led to new alternative source of energy like biodiesel. And so that's one of the reasons why I signed into law the first-ever federal tax credit for biodiesel producers.
In other words, we're interested in addressing our energy security need on a variety of fronts. It makes sense for the United States to have a comprehensive strategy to help us diversify away from oil.
And so we also got to understand that we've got to research not only to invest in ethanol and biodiesel, but part of a comprehensive strategy is to spend money on researching new battery technologies.
And one of the really interesting opportunities available for the American consumer will be the ability to buy a plug-in hybrid vehicle that will be able to drive up to 40 miles on electricity.
It seems to make sense to me. If we're trying to get us all gasoline with crude oil as the main feedstock, then why wouldn't we explore ways to be able to have vehicles that use less gasoline? And one way to do so is to use electricity to power vehicles.
And we're pretty close to a breakthrough. We believe we're close to a technology that will make it possible to drive up to 40 miles on electricity alone, and then if you have to drive more than 40, then your gasoline kicks in. But you can imagine what that'll mean for drivers in big cities who on a daily basis they don't drive over 40 miles. And so therefore, a lot of drivers are going back to forth from work in big cities won't be using gasoline, and that's going to help.
We have $31 million in our budget to speed up research and development and to advance battery technologies.
And finally, one other opportunity that is more long run than ethanol or biodiesel or plug-in hybrid vehicles or encouraging people to buy the hybrids that are on the market today is hydrogen.
We're spending about $1.2 billion over five years to research the use of hydrogen to power vehicles. And it makes a lot of sense when you think about it because hydrogen produces zero emissions. The only emission it produces is water.
And when I was out there in California, I visited the California Fuel Cell Partnership and saw buses and cars and SUVs that are driving on the highways out there powered by hydrogen.
And the research and development money that we have spent has lowered the cost of hydrogen fuel cells. It's helped to make them lighter.
In other words, there's an industry coming and it's an industry that will enable the consumers to drive to work, just like we're doing today, but not rely on foreign sources of oil.
What I'm describing to you today is a strategy that recognizes the realities of the world in which we live. Our dependency on oil has created economic security issues for us and national security issues for us. And therefore this country must use our brain power and entrepreneurial spirit to diversify away from the hydrocarbon economy.
You all have known this a lot longer than most Americans. You've known that we needed to have this strategy. And that's why you're on the forefront of incredible changes that are taking place in this country.
You know, there's no doubt in my mind that one of these days, instead of people driving up to a gas station they're going to be going up to a fueling station. And they'll be able to have choices to choose from. You've got a hydrogen-powered car, you'll be able to have that choice. If you want 85 percent, maybe someday 100 percent, ethanol, that'll be an option available, too.
We owe it to the American people to be aggressive on price gouging now. We owe it to the American people to be promoting alternative ways to drive their cars so as to make us less dependent on foreign sources of oil. We owe it to the American people to be aggressive in the use of technology so we can diversify away from the hydrocarbon society.
And that's precisely what we're doing. And I'm glad to stand with you.
I appreciate your work for the United States of America. Thank you for letting me come by and talk to you. And may God bless you.
KAGAN: We've been listening into President Bush. He is speaking today at the Renewable Fuels Association Summit, talking about basically high gas prices, and coming up with a number of proposals that he thinks -- that he hopes, long-term anyway, can help gas prices here in the U.S., including this proposal to stop adding to the petroleum reserve. Also he ruled out raising taxes. He's calling for an investigation into gas pricing and saying there's too many localized fuel blends. Also, he's trying to promote more drilling in the Alaska National Wildlife area reserve.
Let's go ahead and talk about some of these ideas and how they might help or not help. Actually, yes, we'll do that. I want to welcome in Diane Swonk. She's with us now from Chicago. She is a financial analyst.
Diane, good morning. Good to have you here with us.
DIANE SWONK, FINANCIAL ANALYST: It's good to be here.
KAGAN: Some of the ideas that President Bush is talking with about. First of all, the idea of making sure that consumers are treated fairly. And he's looking -- he's called for not one, but two different investigations, making sure that there hasn't been price fixing.
SWONK: Well, certainly that's one of the number one political issues right now. It's got a lot of popular support. In an election year, this is the reasons why Congress has jumped on it, the whole idea of windfall taxes against the oil companies. The one caveat in all of this is that, remember, one of the reasons we don't have as many refineries today as we need is because energy prices grew so low that the oil companies did not have a justification for building those refineries in the 1990s. And I think much of the burden on the P.R. side of this falls on to the oil companies.
However, if we were to set a precedence for taxing windfall profits, which would be very politically popular -- and I think many consumers would sort of stand up and cheer -- it wouldn't necessarily solve the problem, encouraging these oil companies to invest more in the refineries and take a the cash on hand and redeploy it into increasing capacity is -- which is one of the key problems at this point point in time.
KAGAN: He talked about promoting greater fuel efficiency. And yet, when you look at car sales over the last year, people are still lining up to buy big cars and trucks. SWONK: This is the issue. Twenty-five percent of all vehicle sales in the first quarter were still SUVs, gas-guzzling SUVs. And we've got an economy where it's sort of bifurcated. Not only are the rich getting richer, we have a whole new class of wealthy consumers out there who are not as sensitive to energy prices, and they're still buying large gas-guzzling vehicles.
At the other end of the spectrum, of course, are wage earners who don't have access to bonuses. These are the people who are really bearing the brunt of the burden of higher energy prices. And the problem is, they can't trade their SUVs in now, because they've gone down in value. So they're really having to pay a larger percentage of their costs in these higher energy prices.
I think one of the key issues here, especially going in the summer driving season, is, in terms of short-term fixes, is one of the things Bush mentioned, though, on all the different boutique fuels. This is a very big issue for the Midwest. Chicago gets hit with much higher prices because very few refineries can handle the boutique fuels that happen during the summer formulations.
Now, of course, we want to keep our environment more clean, more pure, but in terms of the short-term fix, this is something that the EPA eased up on in the wake of Katrina, which helped to bring it down energy prices once they crossed that $3 a gallon threshold last September.
KAGAN: And then there was a topic that was very popular with the crowd that he was speaking in front of about promoting alternative fuels.
SWONK: Well, certainly, he's singing to the choir there. And this was one of Bush's politically much-needed for his own reassurance, given his popular ratings have dropped so much. But clearly, renewable fuels have been on the horizon for a long time. We are very long on the continuum towards getting there.
The problem is the reality of executing. There are only, I think, two gas stations in the whole Chicagoland metropolitan area that have ethanol fuel. You can even, you know, line up to refuel your car there. So, in terms of being a reality of really reducing prices right now and eating consumer pocketbooks today, which is what consumers care about this minute, it's not a reality yet.
KAGAN: Well, which is the big picture, too. Is there a lot that a single president can do to bring the prices down quickly? It's kind of like trying to turn around a big ship.
SWONK: This is exactly it. And it gets into a whole issue of what role can government actually play? I mean, clearly, we're dealing with some residual issues that could be traced to the Bush administration. And one of the reasons we have higher energy prices today is because of tensions in the Middle East. Whoever wants -- however you want to play that, clearly our role in the Middle East has contributed to that. But with that said, given that one president really can -- our whole view of the economy is that we can't manage the economy. And, you know, consumers are kind of like asymmetric on that. We'd like -- we like the economy not to be managed when things are going good, but we do want it managed when things are going bad. And we're very limited in that role. There's a very limited role Congress can play. And, frankly, if we go too far along any spectrum, we're going to find some unintended consequences, and consequences that aren't going to help us out.
I do think it's interesting that one of Bush's former economic advisers, Greg Manque (ph), actually argued that not all taxes are bad. And ultimately, if we really want to encourage consumers to use less gas-guzzling vehicles, the automakers have always said, get it in demand. Raise the tax on gasoline. Now, this brings up huge issues for lower income families. It may not be the most economically sound solution to get more environmentally-conscious use of -- and less gas dependency, but it's not popular politically at all. So these are the kind of tensions Washington is facing today.
KAGAN: Yes, and the higher taxes is something that President Bush ruled out right at the top of his speech, something he does not promote.
SWONK: Absolutely.
KAGAN: Thank you very much, Diane Swonk, financial analyst from Chicago.
We'd also like to hear from you. What are you doing conserve gasoline? E-mail us at livetoday@CNN.com. We will share some of your e-mail. Actually, let's do that right now. What are you doing to conserve gas?
Jojo in Georgia says that she left a job in Atlanta, 25 miles away, took a job located literally across the street from her house.
Moving on, David in Oklahoma, in his town of about 40,000, there are three or four traffic lights that are rather along in duration. When I'm stopped at any of these intersections, I turn off my vehicle until the light is about to turn green.
Back to Georgia now, Paul says, "I spend in my neighborhood and limit out of neighborhood shopping. And this is cool. I'm actually meeting my neighbors."
And finally, Hal writes in, "Quite simply what I'm doing to hedge against high oil prices is to buy oil and gas stocks." Well, good investing tips from you. Thank you, Hal.
Speaking of investing, let's go ahead and check the numbers on Wall Street. The markets have been open about an hour and 20 minutes. You can see the Dow not moving a lot. It is down six points. The Nasdaq also pretty flat as well. The Nasdaq is down just about six points, five or six points right now, as well.
Well, keeping it on money. Thieves cash in. You don't realize it, but you just cashed out.
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UNIDENTIFIED FEMALE: They tried $1,000 initially, then tried $800, then tried $700, but my bank has a maximum withdrawal daily limit of $500.
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KAGAN: The ATM caper and the bank that sat on its assets. You're watching CNN LIVE TODAY.
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KAGAN: Check out these dramatic pictures of a tornado near El Reno, Oklahoma. It's part of a storm that swept across the central and northern parts of the state. The storm damaged some hangars at the El Reno Airport.
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KAGAN: Coming up, fast wheels with the keys inside? too good to be true? You bet. They're called bait cars. They catch crooks. We're going to show that to you just ahead.
But first, if you're looking to secure your financial future, the key may rest with your hands and your home.
Valerie Morris explains in "At This Age: the 50s."
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UNIDENTIFIED MALE: I'm a gentleman in my 50s, and I'm kind of starting over in life, and I would like to know what can I do to ensure myself a solid financial base for retirement.
VALERIE MORRIS, CNN CORRESPONDENT: There are several things to keep in mind when in this situation. First of all, figure out exactly what your financial situation really is. Certified financial planner Mary Claire Olvine (ph) says a financial adviser can help you determine how much money you need in order to maintain the retirement lifestyle that you would like to live.
If you find money is too tight, it's not too late to begin working again in your 50s. For those 50-plus-year-olds who have trouble finding work, the safety net of Social Security is within striking distance to help supplement paying for your needs, and can be tapped into at age 62.
Just remember, since it's especially important if your 50s to consider your risks, until you qualify for Medicare, you need to make sure you maintain your health insurance.
And finally, there's something else working in your favor. You've spent years getting your house in order. So now it might be the time to cash in on it. Home equity can provide an emergency source of funding.
Answering your questions "At This Age," I'm Valerie Morris in New York.
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